Positive outlook remains for cobalt market amid short-term tepidity

Asian Metal: Mr. Han, thank you very much this interview and please give us a brief introduction to your company.

Tengyuan Cobalt has annual capacities of 6,000tfor cobalt products and 3,000t for copper products with major products of high purity cobalt chloride, high purity cobalt oxalate, high purity cobalt sulfate, battery grade cobalt carbonate, battery grade cobaltosic oxide, copper cathode, etc. Current cobalt production mainly focuses on cobalt sulfate and cobalt chloride.

Asian Metal: Cobalt prices started to rebound from June after downturn for 2 to 3 months and rumors said that this price increase is manipulated artificially. What do you think of this?

The market of sulphide ore with cobalt 3-20% has been a long-standing global focus this year. The supply of cobalt concentrate has indeed affected and prices were pushed up based on slightly increasing downstream demand coupled with tight raw material supply. Meanwhile, the development of global new energy power market is favorable and the participation of various hedge funds also pushed up cobalt prices. But for now, the increase of downstream demand is lower than expected and meanwhile the demand fell behind as the market gradually shifted into the slack season from late Q2 with the European market entering the summer vacation. Thus, cobalt prices started to fluctuate, just a normal market regulation. As far as we know, cobalt salt producers in China all hold stocks of raw material and products.

Asian Metal: International cobalt prices rose too fast this time and the purchasing cost of raw material is also surging for cobalt salt producers. Does your company have any strategy to copy with this situation?

All previous cobalt sulfate output on cheap raw materials has been ordered. Limited deals can be achieved despite current high prices and most suppliers deliver orders at relatively lower prices. Our raw material prices have been fixed and we purchased 600t of cobalt ore early this year when Jinchuan supplied 1,000t and we plan to purchase the rest 400t of concentrate currently. Thus, the current rising raw material prices impose less impact on us and our price also follows the market trend.

Asian Metal: The current Chinese battery market is still in the slack season and downstream consumers are in low interests in purchases with watchful attitude as far as Asian Metal learnt. Consumers and suppliers of cobalt salt are in a stalemate. What’s your opinion on the future market trend?

In H1 2017, Chinese cobalt traders hold sufficient stocks of cobalt products and thus the market price fell back in Q2 owing to anxiety from traders. Soon afterwards, the battery market entered the slack season and prices were sluggish with no upward momentum. As far as we know, the battery market remains on the positive direction currently and the future cobalt price trend will still depends on the outlook of the battery market. If the market is unable to recover, cobalt prices will be possible to slip. However, China continues to support the development of new energy vehicles currently, the application of storage battery and cobalt prices stay at high level with no more traders entering the market. Thus, cobalt prices will move on the upward trend in the future.

Asian Metal: Your company has raised annual capacity of cobalt salt to 6,000 metal tons through technical upgrades. Based on positive outlook for new energy vehicle market, does your company have any other plan to expand output in the future?

We increased capacity this year to 500tpm from 5,000tpy for cobalt last year. However, the downstream battery market has been dominated by its raw material end and we focus on OEM works with actual sales of only about a half. New demand is in low possibility to see substantial increase and thus we have no plan to further expand capacity temporarily.

Asian Metal: You have mentioned that your company is engaged in part of the OEM works and what is the business focus of your company in the future?

We allocate 150 metal tons to production of cobalt sulfate at present and 100 metal tons to production of cobalt chloride. Currently, downstream battery consumers directly purchase raw material on the market and the purchasing price is much lower than that for cobalt salt producers due to bulk purchases. As far as we know, productions of cobalt salt and anode material are all based on OEM work in China at present, which also exists in enterprises in Henan, etc. besides our company. Cobalt prices stay at high level on the international market and the purchasing cost for cobalt ore is high. Thus, we will continue to maintain OEM works in the future.

Asian Metal: Thank you very much for this interview. I wish every success in your career and thriving business for your company!